Why does living here not make us happy?

A ground-breaking inquiry begins today into whether the dash for growth and wealth in London and the South-East is making people miserable.

It will probe for answers to a question increasingly posed by people living and working in the capital - whether the push for economic prosperity has been achieved at the expense of quality of life.

Among the issues being studied by a top-level group of politicians, academics and planners is whether too many firms and houses are being crammed into too small an area, and whether planners should go back to the drawing board to rethink how the London of the future should look and feel.

It comes after a series of trends suggesting more and more people are finding the stresses of city life too demanding and are either moving from the centre to the suburbs, or downsizing to escape altogether.

The Commission on Sustainable Development in the South-East, which holds its first meeting today, has been set up to find answers to how the region can maintain its success while also enhancing the environment and raising the levels of happiness among its residents.

The group has been formed by the IPPR think tank, which has close links to Downing Street, and a range of county councils, regional bodies and the accountants PricewaterhouseCooper.

Chairman Sir Sandy Bruce-Lockhart, the Tory chair of the Local Government Association, said: "The South-East is the economic powerhouse of the UK. But the challenge is maintaining this success while protecting the countryside, ensuring effective transport and enhancing people's quality of life."

Six "killer questions" have been set out for the commission to answer: 1: Should there be limits to growth in the South-East? 2: Do policy-makers worry too much about Gross Domestic Product (national income) as a measure of success, and should they rethink what is meant by quality of life? 3: Do plans for 200,000 new homes go too far? Should the South-East absorb all the new homes the Government says are needed? 4: Are too many people driving cars - and how should alternative transport services be boosted and paid for? 5: How should water supplies be protected to avoid regional shortage - and how can the increased risk of flooding be avoided? 6: Should we see the South-East as one of the world's "mega-city" regions, and should there be new political relationships between London and the counties that make up the Greater South-East?

Julie Foley, IPPR research fellow and commission secretary, said expensive housing was one of the capital's greatest problems but said the group would examine whether the Government's policy of building more could backfire.

"Simply building lots of new homes will not, on its own, create sustainable communities," she said.

"Extra housing may generate additional traffic, worsening journey times as well as poor air quality."

She added: "The South-East is highly successful on traditional economic indicators but does poorly on quality of life.

"Do we want a situation where people are richer than ever but leading unhappy lives? And if that happens, what will become of those who through low incomes or other reasons have no choice but to live and work in the city?

"We need to start asking these questions."

The commission is due to report its findings in summer next year with an interim report in the New Year.